The rise of altruistic capitalism
Philanthropy organizations are putting their money where their mouth is, but they expect a return.
Why it matters: Historically, nonprofits, NGOs and foundations haven't made returns a primary motive of their investments, which are typically grants for expensive and risky projects.
Driving the news: That's changing, Sustainable Capital Partners senior vice president Victor Rojas tells Axios.
- "Philanthropy is focused on returns in a way they weren't before," Rojas says.
- Though money from philanthropic organizations is still used to de-risk large complex projects, it comes with terms more similar to other private investors rather than those that accompany grants.
Background: Grants are often the first money in for technically complex climate companies that are unable or unwilling to raise money from private investors.
- For instance, Leaft Foods relied on grants for years before raising outside capital, some of which also came from nonprofit organizations.
- Australian reforestation startup Lord of the Trees similarly relied on grants and bootstrapping to get started before taking on $1.25 million in outside funding from a traditional VC firm.
The bottom line: Expect to see more philanthropies dipping their toes into the world of climate investing.